A location-inventory model for large three-level supply chains |
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Authors: | Jean-Sé bastien Tancrez,Jean-Charles Lange,Pierre Semal |
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Affiliation: | a Louvain School of Management, Université catholique de Louvain, Belgium b College of Management of Technology, Ecole Polytechnique Fédérale de Lausanne, Switzerland |
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Abstract: | We study the location-inventory problem in three-level supply networks. Our model integrates three decisions: the distribution centers location, flows allocation, and shipment sizes. We propose a nonlinear continuous formulation, including transportation, fixed, handling and holding costs, which decomposes into a closed-form equation and a linear program when the DC flows are fixed. We thus develop an iterative heuristic that estimates the DC flows a priori, solves the linear program, and then improves the DC flow estimations. Extensive numerical experiments show that the approach can design large supply networks both effectively and efficiently, and a case study is discussed. |
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Keywords: | Location-inventory model Facility location Inventory management Three-level supply chain Reverse logistics |
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